STAR-TELEGRAM OPERATING, LTD.

About STAR-TELEGRAM OPERATING, LTD.

The McClatchy Company is the #3 newspaper business in the US (behind USA TODAY publisher Gannett and tronc). McClatchy has about 30 daily papers with a combined circulation of about 2 million. Its portfolio includes The Kansas City Star, The Miami Herald, The Sacramento Bee (California), and the Star-Telegram (Fort Worth, Texas). In addition, it has a 49.5% stake in The Seattle Times Company, publishes more than 40 nondaily newspapers in eight states, operates online news sites in conjunction with many of its papers, and has stakes in other digital media companies.

Geographic Reach

McClatchy has two operating segments that it aggregates into a single reportable segment. One operating segment consists primarily of the company's newspaper operations in California, the Northwest, and Texas, while the other consists primarily of newspaper operations in the Southeast, the Gulf Coast, and the Midwest.

Operations

To address the structural shift to digital media, the company's newspapers provide editorial content on a wide variety of platforms and formats from its daily newspaper to leading local websites; on social network sites such as Facebook and Twitter; on smartphones and on e-readers; on blogs and in niche publications and websites; in e-mail newsletters and RSS feeds. In addition, its websites offer leading digital classified products such as CareerBuilder.com, Cars.com and Apartments.com and retail and national advertising on Find n Save portals. The company also operates dealsaver, its proprietary daily deals service, in all of its markets.

Financial Performance

During fiscal 2014 McClatchy's revenue decreased by $95.6 million compared to the prior fiscal period. The revenue decrease was primarily due to the continued decline in demand for advertising.

Despite the drop in revenue during fiscal 2014, the company's net income increased by $373 million compared to previous year. The spike was mainly due to income from equity investments and a reduction in debt.

Strategy

Smaller in stature than some of its rivals, McClatchy is also one of the few big newspaper companies that have not diversified wholesale into other forms of media. Both Gannett and Tribune, for example, own several television stations, while Advance Publications and Graham Holdings have diversified into magazines and education publishing, respectively. Reliant on newspaper advertising and subscriptions for the bulk of its sales, McClatchy offers a portrait of the industry's downward spiral caused by readers migrating away from print publications for their news.

McClatchy is still working to boost revenue by transforming itself into a mixed-media news business. It continues to invest in Internet publishing operations to reach readers online and build new followings for its mastheads.